'Girls Gone Wild' Guy Indicted for Tax Evasion

April 11, 2007 — -- Joe Francis, the creator of the video series "Girls Gone Wild," has been indicted for federal tax evasion for deducting more than $20 million in false business expenses.

The "Girls Gone Wild" series has been hugely successful for Francis and his companies, Sands Media Inc. and Mantra Films Inc. Francis has raked in millions from the videos, which showcase alcohol-fueled binges and intoxicated coeds exposing themselves at popular spring break destinations and Mardi Gras.

A federal grand jury in Reno, Nev., returned the indictment against Francis for allegedly using offshore bank accounts to conceal his earnings in 2002 and 2003. Francis is believed to make more than $25 million a year from the videos.

According to the Justice Department, in addition to deducting $20 million in fraudulent business expenses, Francis allegedly transferred more than $15 million from a U.S.- based brokerage account to Rothwell Ltd., a Cayman Islands corporation that was established by Francis.

The federal tax indictment is not Joe Francis' only run-in with the law in recent days, and it appears to be only part of his growing criminal rap sheet. Tuesday, Francis was arrested on a federal arrest warrant executed by U.S. marshals as he arrived in Panama City, Fla. Panama City Airport police picked up Francis on criminal contempt of court charges.

Francis was held in civil contempt in relation to a 2003 civil lawsuit filed by parents of seven underage girls who'd appeared in the videos and who'd claimed they were victimized by Francis.

During settlement negotiations, according to court records, Francis acted bizarrely, at times yelling vulgarities and threats. Documents show that Francis arrived four hours late to the court-ordered mediation March 21, 2007, and and was "wearing sweat shorts, a backwards baseball cap, and was barefoot. … Defendant Francis put his bare, dirty feet upon the table, facing plaintiff's counsel."

Francis reportedly yelled, "We will bury you and your clients! … I'm going to ruin you, your clients, and all of your ambulance-chasing partners!" Francis allegedly continued with the outbursts, shouting, "Don't expect to get a f--king dime, not one f--king dime! … I hold the purse strings. I will not settle this case, at all. I am only here because the court is making me be here!"

During an April 4 hearing, Judge Richard Smoak learned that Francis had reneged on an offer made during the settlement negotiations and ordered that he surrender to U.S. marshals to address the civil contempt orders. When Francis failed to turn himself in, the court issued a warrant.

Barry Richard, one of Francis' numerous attorneys, told ABC News the civil suit had been settled, but he declined to disclose the amount of the settlement.

Francis faces a bond hearing April 23. "The only reason he is in jail is because he is awaiting a bond hearing," Richard said.

The "Girls Gone Wild" creator was recently sued in another civil case in Florida by three women who claim they were under the age of 18 when Francis and his company filmed them in 2001.

But Francis is no stranger to legal trouble.

In September 2006, he pleaded guilty to sexual exploitation charges for using minors in the videos that Francis and Mantra Films produced in 2002 and 2003. Under federal law, producers of adult videos are required to keep records validating that the individuals in the videos are adults. Mantra Films failed to produce those records on several instances.

Court records show Mantra pleaded guilty to three counts of failing to keep the required records and seven labeling violations.

Francis has a previous criminal record; he was arrested in March 2002, by the Bay County sheriff's office in Florida for promoting the sexual performance of a child under the age of 18, prostitution, racketeering and drug trafficking, though the trafficking charge was later dropped. He could still face prosecution in Florida in addition to the federal charges.

Previously, the Federal Trade Commission charged the "Girls Gone Wild" producers in a civil complaint for deceptive advertising for automatically shipping and billing unordered videos to previous customers without their consent.

If convicted of the tax charges, Francis could face up to 10 years in prison and $500,000 in fines.